VAT RATE IN UK

There are only 3 types of VAT rates in the UK: 20%, 5% and 0%. Some goods are exempt from paying this type of tax, or are outside the VAT system. The standard rate of 20% is the main and most common in the commercial area. The reduced rate of 5% applies to domestic fuel and energy products, energy efficient installations and certain construction activities. The 0% rate is imposed on the export of goods from the UK, as well as the supply of certain goods and services, for example, children's clothing, books, food.

VAT is not levied on education and insurance services, as well as health and social services. In addition, VAT will not apply to fundraising for charity events or non-productive activities such as hobbies. Of course, in this case, it is necessary to comply with the conditions specified by law.

VAT in the UK after Brexit

Since January 1, 2021, the UK has withdrawn from the VAT regime in the EU. What changes did this entail? Let's consider the main ones:

First and foremost, the UK will no longer have to take into account the provisions of the VAT Directive in the provisions of its own law. For example, the 15% minimum VAT rate set by the Directive will no longer be taken into account. The same applies to reduced VAT rates.
• VAT will be charged on imports of goods to the UK from the EU, and UK VAT will not be charged on exports of goods from the UK to the EU.
• Distance selling rules no longer apply. UK to EU remote sales are now UK exports and imports to EU member states.
• A number of simplifications that the UK, as a member of the EU, could use, are no longer available to it. This applies to both the reverse charge VAT (VAT subject to mutual offset), assistance in sending cargo with low cost and other concessions.
• UK companies that sell goods in EU member states will have to register for VAT purposes in the countries where the sale is made. This also entails additional VAT filing obligation.
• The rules for using the MOSS internet service will also change. UK companies need to apply for a new EU MOSS registration for digital B2C services.
• UK companies that have paid EU VAT by or before 31 December 2020 must claim reimbursement by 31 March 2021.
• UK businesses are no longer required to complete the EC Sales List when providing services to businesses located in the EU.

After July 2021, entrepreneurs holding inventory in the EU or working with the FBA program will still have to register as VAT payers.

From July 2021, the marketplace will be obliged to declare import VAT for the supply of goods from third countries with a value not exceeding 150 euros, i.e. the marketplace will be required to provide information on the import of goods into Germany using the OSS or IOSS system. It will charge French and German consumers 20% and 19%, respectively, at the point of sale. DeutschShopper may close its French and German VAT registrations if it does not use them for other purposes, such as using a warehouse in France, selling through its own website, or selling goods worth more than € 150.